You know that your life insurance policy. However, a number of insurance policies available, you may find it difficult to choose the right. It is not really as difficult as it seems, but once you understand the basic type of life insurance.

Term life insurance

With a long-term policy, you get "pure" life insurance. Term insurance provides a death benefit for a specific period of time. If you die during the coverage period, the beneficiary (the person you named to collect insurance benefits) receives the death benefit (face value of the policy). If you live beyond the term period, your coverage ends and receive nothing in return. Term insurance is available for periods ranging from 1 year to 30 years or more. You may be able to renew the policy for another term, regardless of their health, but at a higher rate. Your premium goes to administrative costs, corporate profits, and a reserve account that pays claims of those who die during the period of time. As we age, the possibility that you will die increases. To cover this risk increases, your premiums will also be carried out at regular intervals. For this reason, the premiums were very cheap at the time that you initially purchased your term policy will be much more expensive as they get older. Most term insurance also has a conversion function that allows you to change your coverage to some type of permanent insurance without answering health questions.

Traditional whole life insurance--guaranteed premiums

Whole life insurance is a type of permanent insurance or cash value insurance. Unlike term insurance that provides coverage for a specified period, provide permanent insurance coverage for your entire life. When you make premium payments, you pay more than necessary to pay the current cost of insurance coverage and costs. The overpayment is credited to an account of the cash value. This cash value account allows the insurer to charge a level premium and guaranteed * to provide a death benefit and cash value life policy as a whole.

When you pay your bills, the present value of the account grows. Traditional whole life insurance, the present value of the account is guaranteed * and as the portfolio of general insurance - will not get to choose how the present value of the account is invested. However, the monetary value can potentially grow beyond the amount secured by the payment of dividends (profits insurer "mutual"). Present value grows tax deferred and can be used as collateral to borrow directly from the insurance company or can be accessed through a partial or total waiver of the policy. It 'important to note, however, that a policy loan or partial withdrawal is to reduce the death benefit policy, and a complete capitulation to terminate coverage altogether.

Universal life--openness and flexibility

Universal life is another type of permanent life insurance with a death benefit and cash value account. As a whole life insurance, cash value is held in the portfolio of general insurance company - do not get to choose how the account is invested. Unlike traditional life, universal life insurance allows for flexibility in premium payments.

A policy of universal life insurance, general, provide very broad premium guidelines (ie, the minimum premium and maximum), but within these guidelines, you can choose how and when to pay premiums. The reduction or increase in premiums will impact the growth of cash value component and possibly the death benefit. You are also free to change the policy death benefit directly (again, within the limits set by policy) your financial situation changes. Note, however, that if you want to increase the amount of coverage, you must go through the insurability process again, probably as a new medical examination, and their premiums increase. Universal life policies reveal all aspects of the policy of the cost structure, including the cost of insurance (the portion set aside to pay claims) and expenses. This information is not available with other types of policies.

Variable life--you make the investment decisions

The universal life insurance in general provide very broad premium guidelines (ie, the minimum and maximum payment of premiums), but these instructions, you can choose how and when to pay premiums. Reducing or increasing premiums affect the growth of the present value of the share, and possibly death. You are also free to change this policy death benefit directly (again, within the limits set by the policy), as economic conditions change. Remember, however, that if you want to increase the amount of coverage, you must go through the process of eligibility of the reinsurance contract, and possibly a new medical examination, and the premium increase. universal life insurance to reveal all its cost structure, including the cost of insurance (some reserved for paying claims) and expenses. This information is not always available in other policies.

Joint or survivorship life for you and your spouse

Some couples choose to purchase insurance and the same policy. These policies take the form of a first set of death or a second set of die design (for survival). With the first death, the death benefit is paid to the death of the spouse who dies first. With the second to die, no death benefit is paid until both spouses have died. Second to die policies are commonly used in estate planning to create a reserve fund to pay estate taxes and other charges related to the death of the other spouse. Joint and survivor policies are generally available in any type of permanent life insurance. Besides the fact that two people are insured under a policy, the policy remain unchanged.